Teachers shops stake in Vancouver properties
Landmark buildings have record values
The Ontario Teachers’ Pension Plan is seeking buyers for a minority stake in its $ 4- billion real estate portfolio in Vancouver, including office towers and shopping malls, according to people familiar with the matter.
Cadillac Fairview, the real estate unit of Canada’s third- biggest pension fund, is looking to raise about $ 2 billion from the sale, according to the people, who asked not to be identified. Cadillac Fairview has hired CBRE Group Inc. and Royal Bank of Canada for the sale, the people said. Spokespeople for Cadillac Fairview, CBRE, and RBC didn’t immediately respond to requests for comment or declined to comment.
Teachers is the latest pen- sion group seeking to reduce its holdings in the Vancouver commercial market, where prices have reached record highs amid an influx of foreign cash even as new supply drives up vacancy rates. Ivanhoe Cambridge and the Healthcare of Ontario Pension Plan are seeking about $ 800 million for their office towers in Burnaby, just outside Vancouver.
The Cadillac Fairview portfolio, which hasn’t yet started marketing, includes 14 properties in downtown Vancouver and Richmond, with some of Canada’s largest shopping centres, offi ce towers and historic buildings up for grabs. The assets include a portfolio of waterfront properties including Waterfront Centre, a 21- storey tower on the harbour built in 1990; the 238,000- square- foot PricewaterhouseCoopers Place; and The Station, a historic property built in 1912, currently pending approval for an added office tower.
Some of the country’s big- gest retail assets are also in the mix, such as the Pacific Centre, a downtown retailer with 1.6 million square feet for which Cadillac Fairview submitted a proposal this year to expand. It’s the thirdmost profitable shopping mall in Canada, according to brokerage Avison Young, with $ 1,599 in sales per square foot. The centre also contains eight office towers of two million square feet, including 701 West Georgia and the HSBC building.
The net asset value of Cadillac Fairview’s real estate holdings increased 13 per cent to $ 24.9 billion in 2015 over the prior year, according to the latest financial report from the Toronto-based pension fund. It also lists six of the Vancouver properties as worth at least $150 million.
Demand for Vancouver offices has sent prices of properties to record highs, i ncluding Anbang Insurance Group Co.’s purchase of the Bentall Centre. The vacancy rate in the city rose to a 12- year high of 10.4 per cent as of June 30 as tenants absorbed one million square feet of new space since the same time l ast year, according to Avison Young. Buildings downtown, where most of Cadillac Fairview’s properties are located, are faring better, with vacancy t i ghtening to 7.8 per cent from 9.8 per cent at the end of 2015.
Additional space is set to flood the market, with six office towers under construction and 10 buildings proposed for the city, including Cadillac Fairview’s Waterfront Tower.